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TheStreet Open House

Why Kate Spade (KATE) Stock Is Tumbling After This Morning’s Gain

NEW YORK (TheStreet) -- Shares of Kate Spade & Co. (KATE) are dropping by -23.49% to $29.74 on heavy volume in early afternoon trading on Tuesday, reversing the stock’s pre-market gain, due to the company's concerns that its growth is slowing down, Bloomberg Businessweek reports.

The women’s handbag and accessories retailer saw a spike in its stock this morning after reporting a narrow net loss of -$4.04 million, or -3 cents for the 2014 second quarter, compared to a loss of -$43.14 million, or -36 cents per share for the 2013 second quarter.

Kate Spade revenue rose to $266 million from $179 million a year ago.

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Analysts polled by Thomson Reuters expected break even earnings on revenue of $237.83 million for the most recent quarter.

Additionally, the company said in a conference call that it may postpone its profit margin goals for 2016 until 2017, due to the fact that its Saturday brand is taking longer than expected to ramp up, Businessweek noted.


Separately, TheStreet Ratings team rates KATE SPADE & CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate KATE SPADE & CO (KATE) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, premium valuation and weak operating cash flow."

You can view the full analysis from the report here: KATE Ratings Report

KATE Chart KATE data by YCharts

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